BY TED GRIGGS

Proposed federal legislation could take back millions of dollars from Arkansas' State Children's Health Insurance Program (SCHIP), which covers the children of the working poor.

In 2007, 17 states will face an $800 million shortfall in the federally funded program, according to the Center on Budget and Policy Priorities. However, Illinois, New Jersey, Massachusetts and Georgia account for $724 million of the total shortfall anticipated.

Some lawmakers have suggested taking money back from the states that have yet to spend all of their SCHIP funds. Arkansas is one of the states that hasn't spent all of the money allotted to the program in 2005.

"We just think there's got to be a better way to address the shortfalls that some states have other than taking it from states that maybe have some unspent dollars in their '05 allotment," said Sen. Blanche Lincoln (D-Ark.).

SCHIP provides annual allotments, Lincoln said. A state has to spend all of one year's allotment before it can draw down the money from the next year's allotment.

The program, established in 1997, gives a state three years to spend each annual allotment, Lincoln said. If a state doesn't spend all of its funds by the three-year mark, the money is redistributed to states that have exhausted their funds.

Some 62,500 Arkansas children receive health coverage through SCHIP, Lincoln pointed out.

Arkansas will spend $47 million of its federal SCHIP dollars the 2006 fiscal year and $55 million in the 2007 fiscal year. Both amounts are more than the federal allotments for the state of $43 million for fiscal 2006 and $49 million in fiscal 2007.

Under President George Bush's proposed 2007 budget, states would only be given two years to spend their SCHIP money, Lincoln said. Arkansas would lose an estimated $26.2 million of its 2005 funds, and all of that money has already been obligated.

Lincoln and some other lawmakers have recommended helping the states that anticipate budget shortfalls by boosting the 2007 SCHIP funding enough to allow states to cover their expected shortfalls.

Congress was able to prevent that because it did not approve the budget, Lincoln said.

Lincoln said she hopes that the issue gained enough people's attention that the three-year spending deadline won't be changed.

If all goes as Lincoln wishes, Congress should be able to address the anticipated fiscal 2007 shortfalls in SCHIP during the lame-duck session following the mid-term elections, she said.

However, the threat is far from over, she said. The president is not the only person who has called for cutting the time states have to spend their SCHIP money.

One proposed Senate bill would cut the time to two-and-a-half years. Another would simply redirect the money to the states with shortfalls.

SCHIP was designed to expand health insurance coverage to children who did not qualify for Medicaid but whose families didn't have enough money to buy private coverage. To qualify, children must be younger than 19 and live in a family with an income of 200 percent of the federal poverty level or less.

All of the country's states and territories have some version of the program, according to the National Governors Association.

The Center on Budget and Policy Priorities estimates that more than four million children are enrolled in SCHIP at any given point in time. However, the United States Department of Health and Human Services has reported the number of children enrolled at any point over the course of a year was more than six million in 2004.

The Center on Budget and Policy Priorities has estimated that without congressional action to increase federal SCHIP funding to avert the shortfalls, as many as 610,000 children would be at risk of losing their health insurance coverage.

The National Governors Association has asked Congress to fix the problem, although the association stopped short of recommending a solution.

With its high poverty levels and large numbers of working poor, Arkansas needs to hang onto its SCHIP money, Lincoln said. It is critical that Arkansas receives more time to use the SCHIP money.

Lincoln said Arkansas should not be penalized for taking the time to make sure all of the participants were comfortable with its children's health program. That approach has worked well until now.

"Enrollment has increased. The program has expanded. We very methodically figured out the best way to cover as many people as possible," Lincoln said.

It would be unfair to change the rules — reducing the spending period — in the middle of the process, she said.




December 2006